A Message From The Editor By: Richard F. Roadcap, D.D.S. Volume 4 No. 5 August 2012
A publication of the Virginia Dental Association
Asset Protection Planning
By: Stanley S. Zelman, DDS, CFP, and Stanley I. Foodman, CPA INTRODUCTION There are two kinds of doctors, those who have been sued, and those who will be. This old saying is familiar to doctors everywhere and with good reason. Your area of practice, your profession or your years in practice make you no more or less immune to lawsuits. Add to that the possibility of illness, injury, an ailing economy and an unpredictable stock market, and your financial risks increase exponentially. Asset protection planning places barriers between your assets and unforeseen financial risks. Historically, professionals have not understood that real asset protection requires the discipline to establish and manage your own “professional advisory board” including a financial planner, an attorney, a CPA and a practice transition analyst. Most of us believed that employing a team approach to protecting our assets was a strategy for corporations not individuals. The consequences of that thinking have cost many of us our assets and our peace of mind. It takes a team to effectively cover all the bases. It is a critical investment with immeasurable value for protecting your assets and reducing stress and uncertainty. THE DISCIPLINE OF INSURANCE Insurance is one of the first steps that we all recognize as essential in protecting ourselves from financial risk. A strong insurance plan should include malpractice insurance, premises liability insurance, employee dishonesty protection, auto insurance, homeowners insurance and umbrella policies. For most professionals, malpractice insurance is the most expensive. We begin our practices with the acquisition of malpractice insurance. The cost of malpractice insurance premiums are very high, resulting in
many doctors going bare or leaving the profession altogether. Liability insurance is needed to protect your practice facility as well as your home. Since experience has shown that many professionals purchase too little liability insurance, we recommend an annual review. That review should include a plan for titling of assets that maximizes asset protection. An umbrella policy is an inexpensive and essential level of asset protection. Many doctors have either not added the umbrella policy to their arsenal of protection, or have limits that are too low given their total net worth. As you move from professional school to residency and into private practice, the most important asset you have is your ability to earn a living. A properly designed disability plan safeguards that living. The plan includes insurance to protect your income stream, insurance to keep the practice open if you become disabled and a retirement contributions policy to protect your financial future if you are unable to make contributions on your own. While we often hear about the high cost of disability insurance, it may be the best money you’ll ever spend, especially in the face of a claim. THE DISCIPLINE OF ASSET MANAGEMENT Beginning with the stock market crash of 2001 and continuing through the real estate crash and mortgage bubble collapse of 2008, traditional investment advice has proven inaccurate. 401ks have turned into 201ks. Because of the interconnectivity of the worldwide economy, we seem to be in a race to the bottom. Since the beginning of this recessionary cycle, the United States has lost around eight million jobs, and it’s predicted that 45% of these jobs will never return. What is one to do? Employ risk management. Become masters of your own fate and surround yourself with the best team possible.
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We buy all kinds of insurance – we insure our cars, homes, practices, our ability to practice, our health, and our lives. I’d wager that if you’re married, the wedding bands worn by you and your spouse are insured against a trip through the garbage disposal. Nearly every situation can be hedged, buffered, or mitigated with the right policy. Suppose I told you that you could insure your standing in the community, deflect the ceaseless criticism aimed at our profession, and drive new patients to your practice for about a dollar a day. You’d say “Why, two prophys and a restoration would pay for a year! Where do I sign up?” The Public Relations Task Force is proposing a threeyear PR campaign designed to create awareness of the importance of oral health, encourage dental visits, and add even greater value to the privilege of membership in organized dentistry. At $350 per year, it’s a bargain. Patterned after the über-successful “Want a healthy body?” campaign in Michigan, where nearly 80% of dentists are MDA members, the taskforce goals are threefold: 1) position VDA dentists as part of a family’s health care team; 2) promote visits to the campaign’s website, as well as increasing visits to members’ offices; and 3) increase the value of VDA membership and encourage non-members to join. I asked Joel Rubin of Rubin Communications, creator of the media content, what benefits would accrue to non-members from this campaign. His answer? “None!” Only VDA members would gain from the increased awareness and brand recognition, as respondents seeking a dentist would be linked only to members’ offices. Attacks on the dental profession are the new blood sport of the national news media. Recent broadcasts such as “Death, Greed at the Dentist; American Children at Risk”1, which aired on ABC’s Nightline, and “Dollars and Dentists”2, an episode of PBS’s Frontline carry a subliminal message: If you’re a regular dental patient, stop seeing the dentist, and if you’re not, don’t even think about going. We take comfort in the belief that half of the population sees a dentist regularly; some practice management experts say 40% (or less) is the new reality. A day of accounting may be at hand. The VDA House of Delegates will decide in September if the proposal is in the best interest of members. Inform yourself; www.smilemichigan.com features videos used in the current Michigan campaign. Let the delegates from your component know your thoughts. We have an opportunity to insure the dental profession continues to enjoy the public’s trust and the privilege of serving the oral health needs of our patients.
1 http://abcnews.go.com/Blotter/ death-greed-dentist-american-children-risk/ story?id=16763109 2 http://www.pbs.org/wgbh/pages/frontline/dollars-and-dentists/
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REPRESENTING AND SERVING MEMBER DENTISTS BY FOSTERING QUALITY ORAL HEALTH CARE AND EDUCATION
Volume 4, Number 5 • August 2012
• VSU Cares • Medical school program focuses on oral health education • RAM volunteer: ‘It makes me realize the urgent need’ • California doctors sue Aetna for coverage denials • Nothing to Smile About • Dentists’ Incomes Shifting
Editor-in-Chief Richard F. Roadcap, DDS, CDE
• Teach Me How To Brushy - Oregon Dental Association PSA (Public Service Announcement)
Business Manager/Executive Director Terry Dickinson, DDS
• Brushing Their Teeth Until Scooby-Doo Says Time’s Up
Managing Editor & Graphic Design Ms. Shannon Jacobs VDA Officers President: Dr. Roger E. Wood, Midlothian President Elect: Dr. Kirk Norbo, Purcellville Immediate Past President: Dr. Michael Abbott, Salem Secretary-Treasurer: Dr. Steven Forte, Richmond
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Etch is published ONLINE eight times a year (February, March, May, June, August, September, November and December) by the Virginia Dental Association as a benefit to members and supporters of the Association. Etch is traditionally published the 3rd or 4th Thursday of the month. The deadline for submissions is the 5th of each month that Etch is published.
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Special Message from the VDA President: MetLife Military Contract Recently, some VDA members have expressed concern that the VDA has not been involved in assisting association members with their issues with the new MetLife military contract. While I understand the concern and frustration over the situation, I wanted to let all VDA members know that there are limitations on what the VDA can do legally but we are working to do all that we can in order to assist our members. As I wrote in the VDA Journal President’s Message in the April, May, June 2012 edition, the needs of our members are paramount and we are working to do what we can to provide you with the resources needed to address this situation. At the Virginia Meeting in Williamsburg, the VDA asked attorney Braxton McKee to give a presentation explaining the MetLife contract and what the VDA and its members can do legally. Unfortunately, the VDA and ADA can only provide guidance on matters such as the one with MetLife due to antitrust regulations. The guidance the VDA can provide through presentations such as those at the Virginia Meeting is to help attorneys who may be retained by members who wish to take legal action. The VDA must be very cautious of the substantial antitrust risk for both the association and those members involved and therefore will do all that we can that is within the legal parameters for situations with insurance companies. Whether and how to participate in insurance plans, including managed care or any particular plan, is an individual decision each dentist must make. The “Department of Justice and Federal Trade Commission Statements of Antitrust Enforcement Policy in Health Care” is able to measure situations against important legal parameters (http://www.ftc.gov/bc/healthcare/industryguide/policy/statement4.htm). Below is a quote from the FTC. “In the course of providing underlying medical data, providers may collectively engage in discussions with purchasers about the scientific merit of that data. However, the antitrust safety zone excludes any attempt by providers to coerce a purchaser's decision making by implying or threatening a boycott of any plan that does not follow the providers' joint recommendation. Providers who collectively threaten to or actually refuse to deal with a purchaser because they object to the purchaser's administrative, clinical, or other terms governing the provision of services run a substantial antitrust risk. For example, providers' collective refusal to provide X-rays to a purchaser that seeks them before covering a particular treatment regimen would constitute an antitrust violation. Similarly, providers' collective attempt to force purchasers to adopt recommended practice parameters by threatening to or actually boycotting purchasers that refuse to accept their joint recommendation also would risk antitrust challenge.” The ADA offers its members a wealth of information about practice options to help members make informed decisions about how to manage their practice. The ADA also provides a contract analysis service free of charge through the VDA. This service offers analysis of provider contracts (i.e., from managed care companies) and informs members in clear language about the provisions of the contracts so they can make informed decisions about the implications of participation. Members can contact Laura Givens at 804-523-2185 or email@example.com for more information. Sincerely, Roger E. Wood, D.D.S. Presideny, Virginia Dental Association
New River Valley Dental Outreach September 14, 2012 Dentists in southwest Virginia are organizing an annual Free Adult Dental Care Day in the New River Valley. The day is September 14, 2012. At this time 30 dentists in four counties and the city of Radford have volunteered. All patients are screened by the Free Clinic of Christiansburg. Most dentists will be working in their offices, and an Oral Surgeon, Endodontist, and Periodontist have also volunteered their services. Numerous dental auxiliary and local volunteers will provide food and transportation for the patients. The doctors expect to see at least 500 patients. If further information is needed, call Dr. Cynthia Southern, (540) 980-5129.
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Third Party Contracts Will they help or harm your practice? By: Dr. Ralph Howell
Business schools teach that the three most important decisions leading to business success or failure are location, location, and location. These decisions will determine not only where you practice, but also the impact third party payers have on your ability to practice. In much of the state, third party payers (except Medicaid) do not play a critical role in the operation of a dental office; however, in areas with heavy concentrations of industry or military bases a significant amount of your practice may be subject to third party contracts. When presented with a third party contract, there are several things to consider. First, what is in the contract? The VDA, through the ADA, has a contract analysis service that is a wonderful member benefit that can explain the contract in layman’s terms and help you have a better understanding of what’s involved and what you are signing. Second, what is the financial impact of the contract? This is something that each practice must determine. Lab costs, supply costs, occupancy costs, and labor costs can vary greatly from region to region, but there is a certain amount that it costs to meet overhead and to keep the doors open. You cannot be successful if you give away more money and
services than if you take in. As a business owner, you should know what the fixed and variable costs are for running your practice, and unless you are compensated for the costs of those services you cannot survive. Once those costs are known you can determine if a contract benefits your practice. In some situations, some payment is better than no payment; however, a lesser reimbursement must be made up in an increased reimbursement from another payer or your business will fail. Each of us must reassess the impact of contracts on a regular basis as the contract, from the payer side, is subject to change. In a new practice, these stresses are especially important, because you cannot practice dentistry unless you have patients to serve. A third party payer may promise you a large volume of patients to entice you to participate in a plan. As a new practice, you do have an increased capacity (empty chair time) but there’s a cost to providing services. One estimate of the cost just to seat a patient in an operatory is $25.00 (in supplies and cleaning). If reimbursement does not cover those costs, it will have to be added to your overhead, thereby decreasing your ability to remain a viable business. An established practice has different concerns. Dropping a plan could cause the practice to have capacity that before was not recognized. Therefore, one must once again look at whether a third party contract will be beneficial to that existing practice.
Where demand for services exceeds supply dental providers are in a good position. You could plan your year and your schedule, open your door and be successful. However, when demand is reduced, as in a recession, all practices have to compete for a shrinking patient base and are more heavily reliant on third party contracts. (This is well-known to contract writers.) In order to stay in business, we must be vigilant in researching each contract, and evaluate it to see if it will be a viable option for our practice. Before signing a third-party contract – a legal document that requires you to provide services for a specified fee – the doctor must know the fixed and variable costs of running the practice. Reimbursement must cover not only those costs, but also provide an income to the doctor. Don’t forget to include increased staff costs associated with filing claims and documenting treatment. Your decision must not be based on emotion or hearsay. A doctor may even want to set a benchmark for projected reimbursement (from third-party plans) and exclude proposals that fall short. The consequences of your decisions may take years to become apparent, so choose wisely.
New Dentist Conference By: Dr. Justin Norbo
The 26th Annual ADA New Dentist Conference was held in our nation’s capital this year. New dentists from across the country convened for a very inspiring and educational session focused on the future of our profession. ADA president Dr. William Calnon opened the conference with words of encouragement and assurance to new dentists that involvement in organized dentistry will help protect the profession of dentistry. His goal this year is to “feel the pulse of member dentists throughout the country” and aid them in their careers.
The conference consisted of leadership development lectures, ways to become involved in organized dentistry, practice development techniques, and various continuing education
courses. A highlight of the conference was a question-answer session between the new dentists and approximately eight members of the ADA board of trustees. As expected, the hot topics discussed in this year’s conference included corporate dentistry, the emergence and role of mid-level providers, and public relations. New dentists expressed concerns with the growing number of dentists joining large group practices and how corporate dentistry may impact membership numbers. Dr. Calnon stated that in 2009 dentists in large group practices comprised 2.9% of the market share and this is predicted to increase to approximately 15% by 2015. It was concluded that further discussions are necessary between the ADA and corporate practices to better understand the value proposition for this population of dentists. The issue of mid-level providers has had much attention and been under scrutiny of organized dentistry since its inception. Members present from the ADA board of trustees as well as Dr. Calnon agreed that the role of mid-level providers and their
particular delivery of care to the public does not seem to be economically viable; however, continued studies are necessary to determine the future of this delivery system. Advocacy for its members has been the main focus of the ADA for years. In addition to advocacy there is an increased interest in encouraging public consumerism. More specifically, the ADA may explore ways to deliver oral health care messages to the public promoting prevention. A strong emphasis towards promoting oral health and prevention to the public may in turn increase patients seeking care from their ADA member dentist. As a first time attendee to the Annual New Dentist Conference I found this to be a very informative and inspirational experience. Next year’s conference will be held in Colorado and I encourage all new dentists to attend this very informative meeting.
Upcoming events of interest... Virginia Board of Dentistry Meeting Date: September 7, 2012 Location: 9960 Mayland Drive, #300 Henrico, VA 23233 Why are Women So Strange and Men So Weird & Bambi vs. Godzilla Date: September 14, 2012 Time: 9:00am-4:00pm Speaker: Bruce Christopher Location: Blue Ridge Community College Weyers Cave, VA Go to http://www.svdaonline.com for more information Delta Dental Miles for Smiles 5K Date: Saturday, September 15, 2012 Time: Registration 7:00am-8:00am, Check In 7:00am8:30am, Start Time 9:00am Speaker/Host: VCU School of Dentistry to benefit Virginia Dental Association Foundation’s M.O.M. Projects Location: Bryan Park, Shelter #1 To register: https://www.support.vcu.edu/event/MilesforSmiles5k VDA Board of Directors Meeting Date: September 21, 2012 Location: Newport News Marriott VDA Governance Meeting Date: September 22, 2012 Location: Newport New Marriott VDA Board of Directors Meeting Date: September 23, 2012 Location: Newport News Marriott 16th District Caucus Date: September 28, 2012 Southern Leadership Conference Date: October 5, 2012 Grundy M.O.M. Project Date: October 6-7, 2012 Speaker/Host: VDA, VDAF Location: Riverview Elementary and Middle School (27382 Riverside Dr., Grundy, VA 24614) Contact: Barbara Rollins at firstname.lastname@example.org or go to www.vdaf.org ADA Annual Session Date: October 18, 2012 Recipes for Predictable Anterior Esthetics Date: November 2, 2012 Speaker: Dr. Gerard Chiche Location: The Jefferson Hotel, Richmond, VA Go to www.vagd.org for more information Soft and Hard Tissue Considerations for Anterior Teeth & Implants Date: November 3, 2012 Speaker: Dr. Hisham Nasr Location: The Jefferson Hotel, Richmond, VA Go to www.vagd.org for more information ACLS Re-Certification Date: November 3, 2012 Location: The Jefferson Hotel, Richmond, VA Go to www.vagd.org for more information
New Dentist/Mentoring Program Date: November 10, 2012 Contact Leslie Pinkston at email@example.com for more information The Art, Science and Simplicity of Direct Composites Date: November 16, 2012 Speaker: Dr. Ron D. Jackson Location: Fairview Park Marriott Hotel Falls Church, VA Go to www.nvds.org for more information NOT a Full Mouth Rehabilitation Course Date: November 16, 2012 Speaker: Dr. J. Luis Ruiz Location: Richmond Marriott West, Richmond, VA Go to http://www.richmonddentalsociety.org for more information
The National Dental Practice-Based Research Network is now OPEN for enrollment.
VDA Board of Directors Meeting Date: November 16, 2012 Location: VDA Central Office Virginia Board of Dentistry Meeting Date: December 7, 2012 Location: 9960 Mayland Drive, #300 Henrico, VA 23233 Medical and Dental Considerations of the Most Prescribed Medications Date: January 11, 2013 Speaker: Dr. Hal Crossley Location: Waterford at Springfield, Springfield, VA Go to www.nvds.org for more information VDA Board of Directors Meeting Date: January 17, 2013 Location: VDA Central Office VDA Winter Committee Meetings Date: January 18, 2013 Location: Holiday Inn Koger Center VDA Board of Directors Meeting Date: January 19, 2013 Location: Holiday Inn Koger Center Give Kids A Smile – Richmond Date: February 8, 2013 Location: ACCA Shriner’s Facility Increasing Your Professional Power While Managing Your Stress Date: February 22, 2013 Speaker: Dr. Jerry V. Teplitz Location: Fairfax Marriott at Fair Oaks, Fairfax, VA Go to www.nvds.org for more information New Dentist/Mentoring Program Date: February 23, 2013 Contact Leslie Pinkston at firstname.lastname@example.org for more information New Dentist/Mentoring Program Date: March 4, 2013 Contact Leslie Pinkston at email@example.com for more information For complete events calendar go to www.vadental.org/events
All dental practitioners and other interested individuals (dentists, dental hygienists, educators, etc.) are invited to enroll. The network conducts studies with practitioners, and in dental practices, on topics selected by practitioners. Practitioners may participate at a level that best fits their schedules, from informational only, through full engagement in research studies in their offices. ENROLL ONLINE: http://www. nationaldentalpbrn.org/ Questions regarding the network or enrollment should be directed to: Deborah McEdward, RDH, BS, CCRP Education and Training Coordinator II 352.273.5848 firstname.lastname@example.org
Continued from page 1 Each and every strategy recommended by your team must be customized to your specific asset management needs. We are talking about growth, your personal level of comfort, future income streams and the future of your heirs. The rate of change in the world is accelerating. Money continually loses value. Income protection must always be considered. Downside protection of asset portfolios and current and future liquidity strategies are the flavor of the month for the foreseeable future. Going back to basics is undoubtedly the most prudent course for dealing with change. Constant review, reporting and revising of your asset management plan is an absolute necessity. That includes tax reduction strategies. Because of the ballooning deficit, your future tax bite is certain to increase. Consequently, keeping in mind the ability to co-mingle tax-free cash flows with taxable cash flows is a key to financial planning in the 21st century. THE DISCIPLINE OF PROTECTING THE VALUE OF THE PROFESSIONAL PRACTICE We have seen unbelievable changes in the professions over the last 35 years. Who knew that traditional fee-for-service medical practices would be completely destroyed by insurance companies and government intervention, only to be reinvented by concierge practice? Who knew that by eradicating caries, traditional dentistry would have to reinvent itself, delivering a more integrated, comprehensive and sophisticated level of healthcare? Today’s published data shows that general dentistry is more economically successful than general medicine. This includes both the annual income as well as the market value of dental practices. General dental practices change hands at much higher multiples than general medical practices. Consequently dentists have the opportunity to become entrepreneurs and add more value to their retirement assets, while the average physician merely has a job. Since the reinvention of dentistry, many dentists have captured millions of dollars of assets from their practices years before they retire. They go on to build up additional equity and repeat the cycle to enhance their future income streams in retirement. The same can occur for physicians. Because of the sea changes in our economy and the practices of medicine and dentistry, doctors must rebrand themselves, reinvent the delivery of professional services and bridge the gap between the professions. THE DISCIPLINE OF TITLING AND TRUSTS Depending on where you live, titling may help to protect your assets. Each state has its own set of laws. A thorough coordinated review by your team of professionals is necessary to determine the best way to protect your assets.
For example, 20 states currently allow titling for a married couple as tenancy by the entirety for all assets, and another seven allow protection for real estate only. Under tenancy by the entirety provisions, each party owns the entire property or estate. The advantage is that creditors of one party cannot enforce liens against the property. In states where tenancy by the entirety does not apply or does not provide the level of asset protection you need, other options may be available, including the use of Limited Liability Company (LLC) structures, Family Limited Partnership (FLP) structures, Domestic Asset Protection Trusts (DAPT) or Offshore Trusts. Protections offered to investment accounts vary from state to state. For example, in some states cash values of life insurance and annuities receive effective creditor protection by existing law. However, in other states minimal or no protection is offered. The use of LLC’s to hold life insurance and annuities may offer additional protection. It is the responsibility of your financial team to offer the best asset protection solutions. The same holds true for estate planning. The use of asset protection tools including tax mitigation
strategies, Bypass Trusts, QTIP Trusts, ILITs and Spendthrift provisions must be considered by you and your team. CONCLUSION Asset protection planning places barriers between your assets and unforeseen financial risks. Protecting your assets in the face of economic and personal challenges requires you to employ risk management, to become the master of your fate. Establish and manage your own “professional advisory board” including a financial planner, an attorney, a CPA and a practice transition analyst. Surround yourself with the best team possible. Constant review, reporting and revising of your asset management plan is an absolute necessity to insure that your future is protected. EDITOR’S NOTE: Dr. Zelman may be contacted at: email@example.com or stan@zrpcapitalfunding. com. You can also reach him by phone at (703) 909-8417. *Though it is beyond the scope of this article, life insurance is another essential asset protection tool. We will tackle the issue in an upcoming article.
Sell your practice, realize your equity and maintain control of your career. As an industry leader in dental practice management DCA offers win-win-win solutions for you, your staff and your patients while providing you with the greatest value for your practice. You’ve got options.
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VSU President Thanks M.O.M. Volunteers
On behalf of the Board of Visitors, Administration, Faculty, Staff, and Students of Virginia State University, I would like to take this opportunity to thank you for recently serving as a volunteer with our very first VSU Cares event, which was a great success. This event attracted over four hundred individuals from the surrounding communities, which provided them with free dental healthcare services that otherwise would not have been available to them. Your valuable time, service, and assistance were deeply appreciated and again we say “thank you.” With warmest regards,
President, Virginia State University “Building a Better World”
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